House Again Brings Municipal Relief for Property Taxes

Boston – State Representative Barbara L’Italien (D-Andover) today announced that the House of Representatives approved by a wide margin a bill granting significant financial relief to cities and towns across the Commonwealth by allowing the consolidation of underperforming local and county pension boards into the state Public Retirement Investment Trust board (PRIT).

The savings for cities and towns could be more than $100 million per year and, combined with the measure approved last week allowing communities to opt into the state’s health care system, the Group Insurance Commission (GIC), the House action could bring more than $250 million in savings to help communities reduce the reliance on property taxes.

“The House has continually put cities and towns first and this is just another example of our commitment to do all we can for the communities we represent,” said Representative L’Italien. “We have provided a roadmap for millions of dollars in savings in local budgets and I’m proud to have supported this important bill.”

“This is yet another significant reform measure that sends a strong message to cities and towns that we are serious about relieving pressure on the property tax,” said House Speaker Salvatore F. DiMasi. “Now we need to see communities join the GIC, improve their pension investments and more aggressively find efficiencies in their own budgets.”

In the bill, underperformance is defined by a two part test: Not having a funded ration over 65 percent and not being within 2 percent of the PRIT rate of return over the last 10 years. The administration of benefits will remain the responsibility of the local board that currently manages the pension system. Twenty-five systems will currently be incorporated into the state system.

“Taxpayers should not be left holding the bag for investment underperformance and the funds impacted by this legislation would be over $700 million healthier if they had been invested with PRIT,” said Public Service Committee Chairman Jay R. Kaufman (D-Lexington), whose committee primarily worked on the bill. “It would be irresponsible to allow this kind of underperformance and stress on local property taxes to continue.”

The legislation now proceeds to the Senate for its consideration.

House Brings Municipal Relief for Property Taxes Through Significant Health Care Savings

BOSTON – State Representative Barbara L’Italien (D-Andover) today announced that the House of Representatives approved by a near-unanimous margin a bill granting significant financial relief to cities and towns across the Commonwealth by allowing municipalities to enroll workers in the state health insurance system.

The savings for communities, estimated at between $120 million and $180 million per year, will significantly help communities reduce their reliance on the property tax. The bill, approved by the House in a vote of 149 to 1, proposed and developed by House members over the last two years, will be followed by further relief for communities with proposed changes to the investment of local pension funds.

“Our cities and towns need help and this is a bold reform that gives communities the tools to, in some cases, literally save millions of dollars each year – money that can be used to relieve the burden on property owners,” said Representative L’Italien. “I am hopeful that our communities will quickly adopt this important reform.”

Municipal health insurance costs have been rising at unsustainable rates, and many communities have been hard-pressed to meet the yearly escalating costs which now represent a disproportionate share of the overall bottom line.

The bill, “An Act to reduce the reliance on property taxes through municipal health care,” seeks to offset escalating municipal health insurance costs by allowing communities to enroll in the state Group Insurance Commission (GIC). By creating a new local option for municipalities to purchase their health insurance through the GIC, employees will now be able to subscribe to a potentially better plan than they now have and enjoy substantial savings on the superior coverage for them and their families. The legislation now proceeds to the Senate for its consideration.

A community-by-community breakdown for municipal costs and increases dating back to 2001 compared to state increases in that period is available online at http://www.mass.gov/Ador/docs/dls/mdmstuf/MunicipalActualExpenditures/insurancegic0106.xls.

“The members of the House should be proud of their important contribution to cities and towns and, hopefully, local officials will now provide much-needed tax relief with these savings,” said House Speaker Salvatore F. DiMasi. “Cities and towns need to first look at efficiencies and cost savings before we turn to the taxpayers.”

“This is one of the most meaningful, efficient and progressive things we in the House will ever do for municipal finance,” said Representative Rachel Kaprielian (D-Watertown), the lead author of the proposal. “The GIC is one of the best-designed, most comprehensive plans of its kind and, as an added bonus, its cost increases average about half of those in municipalities. The savings will be significant for many communities.”